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Affordable Housing

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#1 Triassic


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Posted 09 October 2015 - 06:34 PM

Having read the text below, I was left wondering what will happen to all those self builders asked to make a contribution to 'affordable housing'?


In his speech to the Conservative party conference in October 2015, Prime Minister David Cameron announced what he described as "a dramatic shift in housing policy", by introducing changes to planning requirements for affordable homes. Cameron suggested that housing was the one big piece of unfinished business in the economy, proposing that "A Greater Britain must mean more families owning a home of their own." ....

Stewart Baseley, executive chairman of the Home Builders Federation, said: "Greater flexibility in the way affordable housing is provided should not only speed up the process of securing an implementable planning permission but also make more sites viable for new housing."

There will be a cap on the cost of these homes, of £450,000 in London and £250,000 elsewhere. However, according to housing charity Shelter, only people earning more than £77,000 a year in London will be able to afford to buy one of these homes, and £50,000 a year in the rest of the country.

Campbell Robb, Chief executive of Shelter said: "You don't solve an affordability crisis by getting rid of the few affordable homes we're building, yet that's exactly what this policy will do. Today's announcement confirms our fears that Starter Homes costing up to £450,000 will be built at the expense of the genuinely affordable homes this country desperately needs."

ps. Just a thought, most self builders will be earning well over the £50,000 !

Edited by Triassic, 09 October 2015 - 06:39 PM.

#2 ProDave


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Posted 09 October 2015 - 07:38 PM

I'm a self builder and I earn a LOT less than £50K

My new house should cost all in less than £200K. Does that make it affordable? It's certainly not a "starter home"

I guess I don't fit into this "policy" in any shape or form.

#3 Crofter


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Posted 10 October 2015 - 08:41 AM

Is there anything to stop these new homes being bought by buy-to-let investors?

#4 SteamyTea


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Posted 10 October 2015 - 09:08 AM

Probably on the surface, but not in reality. I suppose the electoral register and who pays the council tax could be a give-away.

This whole 'affordable' bit is a nonsense. Students are now often charged over £100/week to be in approved housing, so that is more than their grant/loan, they are not allowed to claim any benefits (not sure about working tax credits though). And they are loving on borrowed money. So in reality they have a negative income (of about £10,000 a year now). That is really a busted system.

The really odd thing is that the concept of affordability is really just cash redistribution, has little to do with real poverty or extreme wealth, lack of housing or surplus tenants.
There are generally enough homes and enough earnings (if you take benefits into account) in most areas. If there was not then we would have a serious homelessness problem (it is serious at an individual level, but not at the community level).
One advantage of high rents in the private sector is that it reduces spending on 'other things'. This may seem an odd concept, but say a landlord has 52 houses and he makes a gross profit of £104,000/year on them. He can go and buy a new imported car every year, or have foreign holidays, in fact he could elect, quite legally, take all that cash out the country. But would probably not do that. Most probably spend on a larger pension savings, private healthcare and education for children. I doubt that many landlords turn up in a £80,000 car.
Now let us say that we reduce (via whatever means) the rents on those 52 properties by an average of £2000/year.
Could the tenants afford to take all that money out the country either directly or via imports. Yes, as they would slightly increase their purchasing power and buy imported goods (a new telly or a holiday).

I personally think that high property prices is damaging the cash economy and social well being, but is good environmentally.

Edited by joiner, 10 October 2015 - 12:56 PM.
"electoral" for "electrical"

#5 ferdinand


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Posted 10 October 2015 - 10:43 AM

Affordable in rental terms means 80% or less of market rent, though defining "market" rent is a game of pin the tail on the Catherine Wheel.

The wurbling outrage in newspapers is usually based on somebody's surveys of properties on offer, many of which will not make the rent advertised, and which only comprise a tiny segment of the market.

The long term good value properties and landlords keep tenants for 3-10 years and so only feature once when a short term expensive property or rapidly changing tenant features every 6 or 12 months - 20 times as often if you just survey properties on offer. They are all skewed.

Then any sensible LL knows that it costs 2-3 month's rent to change tenants, so in contract rent increases will be between nothing and a very low figure for the majority.

I've just been watching the London Assembly debate on "rent stabolisation" measures. They have had a huge report done with 6 different modelled scenarios as to what would happen. But it is all political @!## monkey-spanking because almost the first table in the report demonstrates that rents have been rising at well behind either inflation or earnings for nearly a decade, and don't need stabilising at all (ie basic premise fails and they need to focus on the supply problem). But gormless politicians have whipped their supporters into a landlord-spanking frenzy and now they need their climax.

See table 1.2 in:
https://www.london.g...on Assembly.pdf

On students the issue is that their loans are now cash cows for Universities and many local authorities take measures which actively increase rents in the PRS for students - yes, regulation is disfunctional as well. See later posting.

Incidentally this is an excellent example of a budget measure which may force significant numbers of portfolio landlords to sell up:


Edited by ferdinand, 10 October 2015 - 11:12 AM.

#6 ferdinand


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Posted 10 October 2015 - 10:58 AM

Students. Specific example.

I know of several former purpose built (1995-7) houses in a Midlands Ciy Centre Uni (400 rooms total) where the houses were built and leases long term rolling.

Between 2001 and about 2011 the Uni increased rents by inflation plus 50% on top (ie an extra 4% a year or so plus inflation) without adding extra significant facilities. Lease payments were in line with inflation. Cash cow.

In about 2012 Uni decided to return these houses and build new ensuite type halls with rents starting at about £100 a week.

What happened was that all the landlords upgraded their houses top to bottom (£4k a room or so when allocated - so £25k per 6 toom flat/house) to double beds / free WiFi / 5 ring cooker / Free 40" internet TV type standard and make more profit while reducing rents by 15-20% from the previous, and the Uni had a market lesson where they ended up offering up to £700 cashback to get students into their bling-halls. Now a couple of years later these houses are available at £75-80 a week while the Uni has a bit of 70s style hutch-rooms at £90-95 and most at £105+.

But some Councils (eg Oxford, Nottingham) aim explicitly to force students into unecessarily expensive halls. Every house lost to students is £1500+ a year in Council Tax not available. They do not have the stuident interest at heart.

A cautionary tale.


Edited by ferdinand, 10 October 2015 - 11:10 AM.